Major Points

1
Major Points

• P. Berck 2007

2
Examples of 4 types
3
Give Away

• homestead act
• Taylor grazing Act
• railroad land grants

4
price increase

• target price deficiency payment
• loan rate
• remove land from production
• conservation reserve and earlier set-asides
• draw diagram and explain target-price and loan.
  show how conservation reserve helps with each
  of these two policies.

5
build infrastructure

• reclamation act of 1902 dams
• railroad land grants and incentive payments to
  build tracktranscontinental railroad
• (nice book railroad express is history of
  same.)
• rural electrification

6
Create Financial Institutions

• land bank
• loans to farmers for land purchase
• mortgages used as backing for bonds sold on Wall
  Street
• made much more money available for development of
  the farm sector than could ever be generated in
  local banks
• (now widely copied in the home mortgage market by
  both government and private banks)

7
Ethanol

• Renewable Fuels Act
• Must use ethanol (or other renewable fuel) in
  motor fuel
• 51c per gallon subsidy to blend ethanol into
  gasoline
• Therefore increased demand for corn
• Therefore higher prices and less need for price
  supports and other programs
• Therefore no nonconservation need for
  conservation reserve

8
Aside

• The US is not a potted plant. It actively
  intervened in the development process.